Safe Harbor Statement: The information on IBM products is intended to outline IBM's general product direction and it should not be relied on in making a purchasing decision. The information on the new products is for informational purposes only and may not be incorporated into any contract. The information on IBM products is not a commitment, promise, or legal obligation to deliver any material, code, or functionality. The development, release, and timing of any features or functionality described for IBM products remains at IBM's sole discretion.

Tony Pearson is a an active participant in local, regional, and industry-specific interests, and does not receive any special payments to mention them on this blog.

Tony Pearson receives part of the revenue proceeds from sales of books he has authored listed in the side panel.

Tony Pearson is not a medical doctor, and this blog does not reference any IBM product or service that is intended for use in the diagnosis, treatment, cure, prevention or monitoring of a disease or medical condition, unless otherwise specified on individual posts.

The TCO of TSM for Backup

||
Visits (10572)

In his Backup Blog, fellow blogger Scott Waterhouse from EMC has yet another post about Tivoli Storage Manager (TSM) titled [TSM and the Elephant]. He argues that only the cost of new TSM servers should be considered in any comparison, on the assumption that if you have to deploy another server, you have to attach to it fresh new disk storage, a brand new tape library, and hire an independent group of backup administrators to manage. Of course, that is bull, people use much of existing infrastructure and existing skilled labor pool every time new servers are added, as I tried to point out in my post [TSM Economies of Scale].

However, Scott does suggest that we should look at all the costs, not just the cost of a new server, which we in the industry call Total Cost of Ownership (TCO). Here is an excerpt:

Final point: there is actually a really important secondary point here--what is the TCO of your backup infrastructure. In some ways, TSM is one of the most expensive (number of servers and tape drives, for example), relative to other backup applications. However, I think it would be a really interesting exercise to critically examine the TCO of the various backup applications at different scales to evaluate if there is any genuine cost differentiation between them.

Fortunately, I have a recent TCO/ROI analysis for a large customer in the Eastern United States that compares their existing EMC Legato deployment to a new proposed TSM deployment. The assessment was performed by our IBM Tivoli ROI Analyst team, using a tool developed by Alinean. The process compares the TCO of the currently deployed solution (in this case EMC Legato) with the TCO of the proposed replacement solution (in this case IBM TSM) for 55,000 client nodes at expected growth rates over a three year period, and determines the amount of investment, cost savings and other benefits, and return on investment (ROI).

Here are the results:

"A risk adjusted analysis of the proposed solution's impact was conducted and it was projected that implementing the proposed solutions resulted in $16,174,919 of 3 year cumulative benefits. Of these projected benefits, $8,015,692 are direct benefits and $8,159,227 are indirect benefits.

The proposed project is expected to help the company meet the following goals and drive the following benefits:

Reduce Business Risks $6,749,796

Consolidate and Standardize IT Infrastructure $4,975,667

Reduce IT Infrastructure Costs $2,057,107

Improve IT System Availability / Service Levels $1,409,431

Improve IT Staff Efficiency / Productivity $982,919

To implement the proposed project will require a 3 year cumulative investment of $5,760,094 including:

$0 in initial expenses

$4,650,000 in capital expenditures

$1,110,094 in operating expenditures

Comparing the costs and benefits of the proposed project using discounted cash flow analysis and factoring in a risk-adjusted discount rate of 9.5%, the proposed business case predicts:

Risk Adjusted Return on Investment (RA ROI) of 172%

Return on Investment (ROI) of 181%

Net Present Value (NPV) savings of $8,425,014

Payback period of 9.0 month(s)

Note: The project has been risk-adjusted for an overall deployment schedule of 5 months."

IBM Tivoli Storage Manager uses less bandwidth, fewer disk and tape storage resources than EMC Legato. For even a large deployment of this kind, payback period is only NINE MONTHS. Generally, if you can get a new proposed investment to have less than 24 month payback period you have enough to get both CFO and CIO excited, so this one is a no-brainer.

Perhaps this helps explain why TSM enjoys such a larger marketshare than EMC Legato in the backup software marketplace. No doubt Scott might be able to come up with a counter-example, a very small business with fewer than 10 employees where an EMC Legato deployment might be less expensive than a comparable TSM deployment. However, when it comes to scalability, TSM is king. The majority of the Fortune 1000 companies use Tivoli Storage Manager, and IBM uses TSM internally for its own IT, managed storage services, and cloud computing facilities.